Traditional retailers and consumer goods companies need to change the business strategies quickly in the realities of a "new normaI" in China. International consumer businesses, in particular, must be more flexible and sophisticated with their offline and online propositions to be competitive, according to a new report by OC&C Strategy Consultants.
From fast food to smartphones, from luxury goods to groceries, the way China shops – and what mainland shoppers want to buy – is changing rapidly. The changes are leaving foreign supermarket and hypermarket chains struggling to keep up by revamping store formats and selling more groceries online, retail analysts say.
On Wednesday Walmart announced a plan to turn round its declining sales in China by boosting store numbers by more than 25 percent, renovating existing shops and introducing a new online shopping app.
Property developer Dalian Wanda, owned by China's second richest man Wang Jianlin, plans to close 10 malls across the country and redesign another 25 to cut retail space, China Business News reported last month.
Zong Qinghou, China's fifth richest man with a beverage and chain-store conglomerate, said at a forum in August that online shopping businesses are "affecting China's economic security" by suffocating stores that have to pay rents.
China’s economic growth may be slowing, but retail spending in the country is expected to remain stable. In the third quarter of last year, China’s gross domestic product grew at a slower rate than it has in five years, and the country will now probably fall short of its annual growth target of 7.5 percent. However, slowing investment, rather than slowing consumption, has accounted for much of the decline. Julian Evans-Pritchard, China economist at Capital Economics in Singapore, notes that retail sales in general show little sign of slowing down.
It took China's biggest retail chain Suning all last year to generate sales of about USD17 billion. Last month, e-commerce giant Alibaba saw sales worth more than half that amount pass through its Tmall website in just one day.
Big retailers like Suning Commerce Group Co Ltd and foreign rivals Wal-Mart Stores Inc and Best Buy Co Inc are struggling to attract customers to their traditional stores in China, where online shopping is booming.
Christmas is not formally celebrated in China and 25 December is not a public holiday as it is in much of the world, including Hong Kong, a special administrative region of China.
That means it is not a major shopping season in the same way as the Lunar New Year, one of China's biggest holidays, or Golden Week that starts on 1 October, China's National Day, and is an important holiday for travel, shopping and dining.
In an effort to bridge the gap between the online and offline shopping worlds, China's Single's Day online shopping festival is expanding this year to traditional stores.
Alizila, the news website of the Alibaba Group, reported that a number of brands on Tmall are extending their promotional actives to some 30,000 physical stores.
By encouraging shoppers to visit stores to touch, feel and try out the products, retailers hope to encourage sales. However, they can still opt to buy the goods online.
Here's a paradox: Manufacturers are seeing big sales increases in China while retailers in the country are struggling, losing money, closing stores, going out of business.
The number of new shopping malls in China is expected to nearly double to a record high this year as developers bet on consumers picking up the slack in the world's second largest economy, says property services firm Jones Lang LaSalle.
The number of new shopping malls built in China's top 20 cities is forecast to jump to 150 this year, compared to 80 in 2012 – that's an almost 88 percent increase, Jones Lang LaSalle said.
The firm also expects the average mall size to increase from 710,418 square feet in 2005 to now exceed over 947,224 square feet.
According to the 2013 China Consumer Market Development Report released by China’s Commerce Ministry, consumer goods sales will grow 13 percent year-on-year, a figure that’s lower than previous years, but still robust by global standards.